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Wall Street Meat
Wall Street Meat is Kessler's story over the past fifteen years, from starting as a junior stock analyst
at Paine Webber, to becoming a well-known technology analyst, to leaving Wall Street and going off
on his own. Along the line, Kessler has bumped into many famous and infamous people, and he is
very candid about what he thinks of these people (hint : it's usually not good).
In fact, one of the main characters
is Frank Quattrone, who was just arrested last week for obstruction of justice and
destroying evidence -- making this book rather timely.
Kessler spends a lot of time illustrating the fact that stock analysts are often clueless (and he should know, having been one for a number of years). To me, that was perhaps the most enlightening aspect of the book : I learned that even (very) highly paid analysts can be stupid, lazy, negligent, incompetent, greedy, and even sometimes dishonest (I know how shocking that might be to most of you, hopefully you can recover from that).
I found it interesting to get a behind-the-scene look at the life of analysts : the trips, the meetings with management, the lies and half-truths, etc... Also the bullshit that goes around, the phony rankings, the uninformed guesses. And of course these people get paid to be confident, so even when you don't know, you have to act like you do know.
If you really make it, you can even become a market-maker : someone whose recommendations actually affect your segment of the market. But Kessler makes it clear that this is a trap, and that many analysts have overestimated their power. After all, these stocks represent real companies, and whether these companies make money or not does eventually affect their stock price. Ah, the painful sting of reality.
Kessler follows the evolution of the profession of analyst from 1985 to the late 1990's, and comments at length on how that role has changed. Back in the old days, the commissions were high, research was a serious business. Interestingly, the Internet changed a lot of that, mostly because it made the commissions practically disappear, going from $0.25/share to less than a penny per share in just over a decade.
Kessler makes some interesting points about the unintended consequences of some of the regulations. For instance, during the 1987 crash, a lot of small investors could not get their trades executed because the traders stopped answering their phones. So the SEC put in a regulation to put a system in place that would execute small trades automatically.
That was the first step towards what we now know is inevitable -- a fully automated marketplace where human traders are used only for large or unusual deals. Therefore, in just 15 years, the world of investment and securities trading has undergone a complete transformation.
Another dramatic change during these years was simply the staggering amount of money that became invested in the market. In 1980, there was about $40 billion invested in professionally managed mutual funds. In 1996, that figure was over $1 trillion.
We are all more or less aware of these changes -- this book brings it all to life.
I found the first third of the book to be absolutely spellbinding, and I would heartily recommend the book just for that. The book opens with a few anecdotes that just made me guffaw aloud as I was reading them. The middle of the book was less exciting. There are lots of names being thrown around, which meant nothing to me. The final part of the book makes up for this, however, with a lot of good stories and observations about the late 90's dotcom boom and bust.
Kessler's style is direct, sometimes almost abrupt. No flourishes for this guy. I particularly appreciated the, how shall I put it, frank and honest evaluation of the many people mentioned in the book. It sometimes feels like target practice, but it's a refreshing break from the mutual admiration society.
The book is often funny, mostly fast-paced. There are a few uninteresting passages, and (much to my surprise) even two pages (1-2) repeated almost verbatim at pages 172-173. At $26, it is a bit steep (it comes out at 12.5 cents/page).
Kessler has written a number of columns for the Wall Street Journal. They are very readable, although some of them are now dated. If you want to get a feel for his style, I recommend reading a couple of these columns before you splurge for the book.
Having read it, I feel a bit more cynical about Wall Street, which is probably a good thing. I also feel like I have gotten a good peek into that universe, and it's not pretty -- no wonder so many things have been hitting the fan over the past couple of years.
Overall, I warmly recommend this book. Unless you're allergic to the world of investment, you should enjoy it and learn quite a bit from it.
You can purchase Wall Street Meat from bn.com. Slashdot welcomes readers' book reviews -- to see your own review here, read the book review guidelines, then visit the submission page.
It was even funnier with me. Here I am, a software developer for in-house IT applications. I had investment banking friends asking me about software startups etc.
But my answers usually scrutinized the balance sheet, and liabilites. I'd answer with something like... "Hey, sure they have no debt, so bankruptcy isn't in the works... But what the hell do you call the 3 million convertable preferred shares,not to mention the 15Million restricted shares that are a time-bomb for new investors. Who care if they make money. A new investor is guaranteed to lose either way!!!" I was all wallstreet'n their asses because I learned so much on the boards. PLus, 1/2 an MBA.
There is a large sector out there of independent analysts, but you have to pay for their research. As always, you have to consider the financial interest of whoever is providing the research. If their entire business model is based around attracting customers to their even-handed and reliable research reports, then you're going to be much better off than the bank's shill...
Stop by my site where I write about ERP systems & more
most of the time you're not getting the bank's research ... those guys are really more for the institutional/reallyreallyreally investors.
:))
as with anythign you spend money on, you should always do your own research. Any company that's public must file a form 10k to the SEC which gives you the financial information of a company. (unless the company lies..
you also have rating agency's that give you a somewhat more fair view (at least to the private investor)... so basically if a company has a research department and they're researching one of their own clients then find another bank that doesn't have the company as a client and compare results.
In 14 or 28 years it'll fall into the public domain. WSM is one of the first books under the Creative Commons Founders' Copyrght.